J.L.S. v. D.B.S., 2016 ONSC 1704

CITATION: J.L.S. v. D.B.S., 2016 ONSC 1704

COURT FILE NO.: 737/13 (St. Catharines)

DATE: 2016-03-21

This is a case under Part III of the Child and Family Services Act and is subject to subsections 45(8) of the Act. This subsection and subsection 85(3) of the Child and Family Services Act, which deals with the consequences of failure to comply with subsection 45(8), read as follows:

45.-(8) No person shall publish or make public information that has the effect of identifying a child who is a witness at or a participant in a hearing or the subject of a proceeding, or the child’s parent or foster parent or a member of the child’s family.

85.-(3) A person who contravenes subsection 45(8) (publication of identifying information) or an order prohibiting publication made under clause 45(7)(c) or subsection 45(9), and a director, officer or employee of a corporation who authorizes, permits or concurs in such a contravention by the corporation, is guilty of an offence and on conviction is liable to a fine of not more than $10,000 or to imprisonment for a term of not more than three years, or to both.

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

J.L.S.

Applicant

– and –

D.B.S.

Respondent

Paul A. MacLeod, for the Applicant

Wayne Norris Brooks, for the Respondent

HEARD: November 16-20, 2015 (St. Catharines)

REASONS FOR JUDGMENT

SKARICA, J.

OVERVIEW

[1] In the early 1990s the applicant, J.L.S., had a relationship with one S.G.. S.G. is not a party to this litigation. They had a daughter, D.R.S., DOB […], 1993. Shortly afterward, they broke up. Family Court proceedings were initiated. Mr. J.L.S. brought a motion for interim custody of the child; Ms. S.G. brought a cross motion for interim custody, interim child support and other orders. On Thursday, September 8, 1994, Ms. S.G. prevailed and was granted interim custody of D.R.S. with an accompanying child support order. Mr. J.L.S. (the current applicant in these proceedings) found the entire experience not to his liking. Regrettably, few Family Court participants enjoy the experience.

[2] Accordingly, when things got serious with the current respondent, D.B.S., J.L.S. presented D.B.S. on or before October 7, 1997 with a cohabitation agreement before they moved into their newly built home. D.B.S. skimmed it over and signed it. She did not seek independent legal advice. She made no inquiries about the value of his assets. Sixteen years later, after a marriage and two children, the couple separated. J.L.S. says that the contract is valid; she says no.

ISSUES

[3] The issues to be decided in this case are:

1. Is a cohabitation agreement valid in circumstances where:

i) The wife generally is aware of the husband’s assets but does not know the value of them but makes no inquiries as to their valuation.

ii) The wife does not seek independent legal advice.

2. Is the wife entitled to proceeds from the sale of the matrimonial home?

3. Is the wife entitled to spousal support and for what amount?

4. Is the husband required to pay child support and for what amount?

ISSUE #1 – IS THE COHABITATION AGREEMENT VALID?

FACTS

1) RELATIONSHIP DETAILS

[4] J.L.S. (“J.L.S.”) is 55 years old and is the applicant. He has worked since he was 14 years old. He has worked at the F[…] plant for 37 years since 1979.

[5] J.L.S. started dating D.B.S. (“D.B.S.”) some time in 1996-1997 and cohabited together in March, 1997 at J.L.S.’s mother’s residence at F[…] Road, Burlington.

[6] The couple decided they wanted to live in their own home. They built a custom home in 1997 at P[…] Cresent, Burlington and moved in around December, 1997.

[7] Just prior to the completion of the construction of the P[...] Crescent home, on or about October 7, 1997, J.L.S. presented D.B.S. with the cohabitation agreement and she signed it. More details regarding the signing of the document will be discussed later.

[8] On […], 2001, their first child, J.S., was born.

[9] On June 6, 2003, the couple were married.

[10] In or around August, 2003, the P[...] Crescent house was sold and the couple moved into a new home at J[…] Street in Beamsville, Ontario.

[11] On […], 2003, the couple’s second child, E.S., was born.

[12] The applicant indicates in his application that the separation date was June 1, 2012. However, both counsel agreed that the date of separation was September 2013. I accept September 2013 as the date of separation.

[13] On or about November 7, 2013, the applicant filed and served his application on his wife. On May 9, 2014, the respondent filed her answer.

[14] However, the couple continued to reside in the Beamsville matrimonial home after they separated until it was sold in November, 2014.

2) CIRCUMSTANCES LEADING TO SIGNING OF COHABITATION AGREEMENT

[15] As indicated, J.L.S. and D.B.S. moved into J.L.S.'s mother’s house in March 1997. They then decided to build their own home on P[...] Crescent in Burlington. In or around the summer of 1997, J.L.S. and D.B.S. met with lawyer Paul Vayda regarding the house transaction. It appears that there was no discussion with Mr. Vayda regarding the cohabitation agreement at that time.

[16] J.L.S. testified that the breakup of his prior relationship (with S.G.) was a “nightmare” and he wished to avoid the turmoil he had gone through. D.B.S. was aware of the difficulties that J.L.S. was going through with S.G.. J.L.S. said hateful things about S.G. and said he would not go through that again. D.B.S. testified that J.L.S. and she discussed signing a cohabitation agreement beforehand and she received the agreement shortly before she signed it.

[17] J.L.S. indicated that in 1997 they were both earning $70,000. When they lived together at his mother’s house, J.L.S. stated that D.B.S. opened their mail.

[18] Accordingly, she would have seen his pension statements and updates when they came in. J.L.S. stated that she knew everything – she knew his whole life. She saw all his pay stubs and saw all his documents in the mail. J.L.S. says she had the cohabitation agreement for three to four months. He told her to get independent legal advice. J.L.S. stated he wanted the cohabitation agreement for two reasons:

1. D.B.S. was promiscuous – he caught her giving fellatio to another man in the living room; and

2. He wanted to avoid the “nightmare” of his first relationship breakup.

[19] The witness to the agreement of both their signatures was Arnold Donnelly, an elderly gentleman who was a neighbour. J.L.S. signed the agreement at his mother’s place and then he left the house, leaving the agreement to be signed by D.B.S., with Arnold Donnelly.

[20] D.B.S.’s testimony regarding the circumstances of signing the cohabitation agreement was somewhat different. She agreed that they had discussed it beforehand. She was aware of J.L.S. wanting a cohabitation agreement due to the difficulties he was having with his previous relationship.

[21] She received the agreement shortly before she signed it. She did not really read it; rather, she skimmed over it. Paragraph 12 stipulates that, with respect to the down payment of their home, J.L.S. would contribute $18,000 and that D.B.S. would contribute $10,000; this reflected their agreement. She does not know what “joint tenancy” means. She did not go through the responsibilities of the parties under paragraph 10. Regarding paragraph 11 (relating to pensions), she was aware of J.L.S.’s job at F[…] and of his F[…] pension, but was not aware of the value of the pension. Regarding the paragraph 17 provision (relating to independent legal advice (“ILA”)), no one told her about it. Regarding paragraph 16, (relating to disclosure), no disclosure details as outlined in paragraphs 16 (a), (b), (c), and (d) were discussed. She was aware he had an interest in another home and that he had no other investments. Basically, she was aware of J.L.S.’s bad breakup with S.G. and J.L.S.’s desire to not go through that again. She was caught off guard by the contract. She said she wasn’t sure. J.L.S. said he was not going through with the house purchase unless the contract was signed. She was given a copy on the day of the house purchase and did not know what she was signing. J.L.S. took the signed copy and gave it to Mr. Vayda. The next time she saw the agreement was after their separation some time in 2013 to 2014. J.L.S. said she was getting nothing. D.B.S. told him that the agreement only pertained to the P[...] Crescent home.

[22] In cross-examination, D.B.S. indicated, regarding disclosure, that at the time of the signing of the agreement she was aware of J.L.S.’s Mustang, F[…] pension and rental property. After the signing of the agreement, she discovered that J.L.S. had no other property. The applicant’s counsel went through various paragraphs of the agreement and her answer was that she did not read the document thoroughly. She read it briefly and thought it was a standard document. She would not have understood it. She thought the agreement was fair at that time regarding the P[...] Crescent home. She did not indicate that there was any fraud, coercion or misrepresentation as stated explicitly in paragraph 17. She indicated that if she did not sign it, he would not go through with the purchase of the P[...] Crescent residence. In her Answer at Tab 4 of the Trial Record, there is no suggestion of fraud, duress or coercion. Paragraph 23 of the Answer indicates the agreement is not valid because she did not have ILA and the clauses contravened a variety of family, property, and estate principles. She did not read paragraph 18 which states that the agreement will survive marriage. She signed at page 8 and signed two copies.

[23] Once they moved out of the P[...] Crescent residence and the home was sold, she thought the contract was no longer valid. She made no attempts to amend or revoke the agreement.

3) CONCLUSION AS TO FACTS

[24] It is impossible to definitively pick between J.L.S.’s or D.B.S.’s version of events. Neither party called the witness Arnold Donnelly. The lawyer, Mr. Vayda, was called by the applicant but was unable to testify to anything meaningful as J.L.S. refused to waive solicitor-client privilege.

[25] At a minimum, the evidence establishes the following:

1. J.L.S. had a bad previous breakup. D.B.S. was aware of it and his desire to have a cohabitation agreement.

2. They had discussed the cohabitation agreement before she received it.

3. D.B.S. was aware of all of J.L.S.’s sources of income and assets. She may or may not have been aware of their values. However, she denies opening the mail at the time of living at J.L.S.’s mother’s home. She did not pursue further disclosure as outlined at paragraph 16.

4. D.B.S. skimmed over the cohabitation agreement and read some parts of it and not others, according to her.

5. There was no fraud, coercion, or duress.

6. Regarding ILA, the document at paragraph 17 outlines D.B.S.’s right to obtain ILA. She signed the document as she wanted to move into their new home at P[...] Crescent. According to Tab 2 of the respondent’s document brief at page 21, the P[...] Crescent residence closed on November 28, 1997. Accordingly, on her evidence she had at least six weeks to get ILA and on his evidence several months to get ILA.

7. At the time of the signing of the agreement, D.B.S. thought it was fair and that it fairly outlined their discussions regarding the house purchase. As they were each making $70,000 per year, the provision regarding neither paying spousal support was fair and reasonable at the time she signed the document. J.L.S. would have had a significant pension but since they had only cohabitated for a short period, and they both had pensions, she was giving up little at that time.

LAW

A) BURDEN OF PROOF

[26] As I have indicated, the wife’s evidence at its highest is that it is no more or less credible than the husband’s version.

[27] The burden of proof for setting aside a domestic contract is on the person alleging that the domestic contract is invalid. The party seeking to escape the effect of the agreement has the onus to show that there are grounds for setting it aside (see Dougherty v. Dougherty, 2008 ONCA 302, [2008] O.J. No. 1502, at para. 11, Loy v. Loy, [2007] O.J. No. 4274, at para. 161 (Sup. Ct.)), Shair v. Shair [2015] O.J. No. 4883 at para. 44).

[28] As a general rule, courts will uphold the terms of a valid enforceable domestic contract. It is desirable that the parties should settle their own affairs if possible, as they are more likely to accept their own solution to their problem than one imposed on them (Farquar v. Farquar, 1983 CanLII 1946 (ON CA), [1983] O.J. No. 3185, at paras. 19-20, Harnett v. Harnett, 2014 ONSC 359, [2014] O.J. No. 237, at paras. 87-88)).

[29] The Superior Court has recently clearly enunciated the law regarding the setting aside of domestic contracts in Harnett v. Harnett, supra,

90 A domestic contract will be set aside when a party was unable to protect his or herself. Such cases are generally predicated upon a finding that one party has preyed upon the other, or acted in a manner to deprive the other of the ability to understand the circumstances of the agreement.

91 The court is less likely to interfere when the party seeking to set aside the agreement is not the victim of the other, but rather his or her own failure to self-protect. The Ontario Court of Appeal in Mundinger v. Mundinger (1968), 1968 CanLII 250 (ON CA), [1969] 1 O.R. 606 (Ont. C.A.) says that the court will step in to "protect him, not against his own folly or carelessness, but against his being taken advantage of by those in a position to do so because of their position."

92 The court must look not at which party made the better bargain but rather, to whether one party took advantage of their ability to make a better bargain. In that taking of advantage is to be found the possibility of unconscionability. See Rosen v. Rosen (1994), 1994 CanLII 2769 (ON CA), 3 R.F.L. (4th) 267 (ONCA)

93 The test for unconscionability is not weighing the end result, but rather the taking advantage of any party due to the unequal positions of the parties. See Mundinger v. Mundinger (1968), 1968 CanLII 250 (ON CA), [1969] 1 O.R. 606 (Ont. C.A.); Rosen v. Rosen (1994), 1994 CanLII 2769 (ON CA), 3 R.F.L. (4th) 267 (Ont. C.A.).

94 The onus is on the party seeking to set aside the domestic contract to demonstrate that at least one of the circumstances set out in subsection 56(4) has been met; then the court must determine whether the circumstances complained of justify the exercise of the court's discretion in favour of setting aside the contract. It is a discretionary exercise. See LeVan v LeVan. 2008 ONCA 388, 2008 CarswellOnt 2738, ONCA.

B) NON-DISCLOSURE

[30] On both versions of evidence at trial, D.B.S. was aware of all of J.L.S.’s assets and failed to make further inquiries.

[31] Section 56(4) of the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) places a positive duty on every spouse to make complete, fair and frank disclosure of significant assets and liabilities.

[32] Pursuant to s.56(4)(a), a court may set aside a domestic contract or provision where a party failed to disclose significant assets when the contract was made. The provision applies whether the non-disclosure is consensual or innocent (see Dochuk v. Dochuk, 1999 CanLII 14971 (ON SC), [1999] O.J. No. 363 at para. 16 (Gen. Div.)). The fact that the property division is not the same as what may have been achieved through the equalization process is not a ground to set aside the agreement (see Armstrong v. Armstrong, 2006 CanLII 32899 (ON CA), [2006] O.J. No. 3823, at para. 2 (C.A.)). The case law indicates that a court should take on a two-stage analysis in considering whether to set aside a domestic contract for non-disclosure (see Quinn v. Keiper et al. (2007), 2007 CanLII 45714 (ON SC), 87 O.R. (3d) 184, at para. 47 (Sup. Ct.)):

1. First, the party seeking to set aside the agreement must demonstrate that the other party failed to discharge its duty to disclose significant assets. The failure to disclose significant assets includes the making of a material misrepresentation about the true value of assets, and the failure to disclose changes in income. The significance of an asset is assessed by measuring the value of the asset against a party's disclosed net assets. To conclude that a party has failed to disclose a significant asset, there must be some evidence to verify the value or extent of the party's assets either at the date of marriage or the date of the agreement;

2. If a court finds that a party has failed to disclose a significant asset, the court must determine, in light of the facts of each case, whether it should exercise its discretion to rescind the domestic contract. The burden of proof lies on the party seeking to set aside the contract to persuade the court to exercise its discretion in its favour. The court will take into account a variety of factors in exercising its discretion:

(i) whether the party who did not make full disclosure was asked or refused to do so; whether that party misrepresented or concealed financial facts; whether the other party had full financial information in any event; and, whether the other party would have signed the contract even if the disclosure had occurred;

(ii) whether the party relied on the non-disclosure or misrepresentations in entering into the separation agreement in the sense that the party would not have entered the agreement had she known the true value of the assets;

(iii) whether a party consented to incomplete disclosure, or was otherwise aware of the asset and had the means to ascertain its value;

(iv) whether one party took benefits under the contract and then moved to set it aside; and

(v) whether there had been duress, or unconscionable circumstances; whether the petitioning party neglected to pursue full legal disclosure; whether she moved expeditiously to have the agreement set aside; and whether the other party had fulfilled his obligations under the agreement.

[emphasis added]

Justice Olah listed several factors in Baxter v. Baxter, [2003] O.J. No. 3672 (Sup. Ct.), at paragraph 6 that are relevant to the court’s discretion in setting aside an agreement due to lack of financial disclosure,

1. Whether the funds existed at the time of the signing of the agreement;

2. Whether the party seeking to set aside on this basis knew the facts were different than originally stated but decided not to inquire further about details, or neglected to pursue full legal disclosure;

3. Whether there was concealment or misrepresentation;

4. Whether there was duress, or unconscionable circumstances;

5. Whether the non-disclosure was material; how important would the non-disclosed information have been to the negotiations;

6. Whether the agreed-upon terms are reasonable and fair; would they have been different had all the facts been known;

7. Whether the request to set aside is made expeditiously.

[33] The courts have stressed the importance of respecting the parties’ right to decide for themselves what constitutes mutually acceptable equitable sharing in the circumstances of their marriage. However, the Supreme Court of Canada has stated in Rick v. Brandsema, 2009 SCC 10, [2009] S.C.J. No. 10,

48 … An agreement based on full and honest disclosure is an agreement that, prima facie, is based on the informed consent of both parties. It is, as a result, an agreement that courts are more likely to respect. Where, on the other hand, an agreement is based on misinformation, it cannot be said to be a true bargain which is entitled to judicial deference.

49 Whether a court will, in fact, intervene will clearly depend on the circumstances of each case, including the extent of the defective disclosure and the degree to which it is found to have been deliberately generated. It will also depend on the extent to which the resulting negotiated terms are at variance from the goals of the relevant legislation. As Miglin confirmed, the more an agreement complies with the statutory objectives, the less the risk that it will be interfered with. Imposing a duty on separating spouses to provide full and honest disclosure of all assets, therefore, helps ensure that each spouse is able to assess the extent to which his or her bargain is consistent with the equitable goals in modern matrimonial legislation, as well as the extent to which he or she may be genuinely prepared to deviate from them.

[emphasis added]

[34] The courts have stated that the non-disclosure must relate to “significant” assets. The court must then determine whether the disclosure was “significant” such that its financial effect would have caused the spouse to rethink her position. The term “significant” must “refer and be measured in the context of the entire relationship between the parties” (see Currey v. Currey, 2002 CanLII 49561 (ON SC), [2002] O.J. No. 5943, at paras. 16-17 (Sup. Ct.), Bruni v. Bruni, 2010 ONSC 6568, 104 O.R. (3d) 254, at para. 99)).

[35] There is a distinction between “a failure to disclose an asset and a failure to value that asset” (see Bruni v. Bruni, supra, at para. 100). The court has stated that disclosure under s.56 (4) must include “not merely the existence of significant assets but also their extent or value” (see Demchuk v. Demchuk, 1986 CanLII 6295 (ON SC), [1986] O.J. No. 1500 (Sup. Ct.), LeVan v. LeVan, 2008 ONCA 388, [2008] O.J. No. 1905, at para. 57). However, the court must consider whether the party alleging non-disclosure had just as much ability to value the assets in question as the opposing party (see Armstrong v. Armstrong, supra, at para. 2, R. C. v. J.B., 2015 ONSC 2589, [2015] O.J. No. 2003, at para. 86 (Sup. Ct.)). The court has also found that a general awareness of the other party’s assets may be sufficient to avoid setting aside the contract (see Lambert v. Lambert, [2008] O.J. No. 1869, at para. 29 (Sup. Ct.)[^1]).

[36] There is a distinction between disclosing assets and liabilities and their values believing the disclosure to be true, and deliberately misrepresenting the values of assets and liabilities knowing them to be untrue (see Virc v. Blair, 2014 ONCA 392, [2014] O.J. No. 2301, at para. 68). However, the use of “failure” in section 56(4) implies that proof of intent or mala fides is unnecessary (see Bruni v. Bruni, supra, at para. 101).

[37] Section 56(4) places a positive duty on every spouse to make complete, fair and frank disclosure of all financial affairs before the contract is entered into, regardless of whether or not there has been a request for information (see LeVan v. LeVan, 2006 CanLII 31020 (ON SC), [2006] O.J. No. 3584, at para. 181 (Sup. Ct.), affd 2008 ONCA 388, [2008] O.J. No. 1905, Montreuil v. Montreuil, [1999] O.J. No. 4450, at para. 100 (Sup. Ct.)). This obligation is not to be construed narrowly (see Hicks v. Hicks, 2002 CanLII 49566 (ON SC), [2002] O.J. No. 710, at para. 44 (Sup. Ct.)). Disclosure may be adequate in reasonably setting out the nature and value of the assets and debts of the parties, even though it may not have been perfect. If so, the court may find that non-disclosure is an insufficient ground to set aside the agreement (see Demaine v. Racine, 2013 ONSC 2940, [2013] O.J. No. 2269, at para. 26). Sworn financial statements may not be necessary for marriage contracts and cohabitation agreements; statements of net worth with an indication of how value was arrived at may be sufficient (see LeVan v. LeVan, supra, at para. 181).

[38] The party alleging a lack of full disclosure may not succeed in setting aside the agreement if he or she “showed a lack of care in pursuing legal disclosure.” In a case where the husband did not disclose a particular item of property, but the wife knew of its existence, the court stated that the wife could have inquired with the husband or relevant financial advisors to obtain details and its value. Even though the wife had ILA, she merely disregarded it by making no inquiries about the property and its value (see Dochuk v. Dochuk, supra, at para. 21). However, in such cases where the court has set aside a contract under s.56(4) on the basis that the complaining party did not take all available steps to obtain disclosure, it appears that some of the other factors listed in Montreuil v. Montreuil were also present.[^2]

[39] Parties must be diligent in ascertaining the facts underlying their agreements; they cannot fail to ask reasonable questions and then complain about a lack of disclosure from the other side (see Clayton v. Clayton, 1998 CanLII 14840 (ON SC), [1998] O.J. No. 2028, at para. 28 (Gen. Div.)). The court has refused to set aside a domestic agreement where the husband did nothing to conceal anything, the wife had a solicitor, and ordinary discovery processes were available and full disclosure could have been had. Hence, the only reason that the wife did not know the details of her husband’s finances was her failure to ask for information (see Farquar v. Farquar, 1983 CanLII 1946 (ON CA), [1983] O.J. No. 3185, at para. 28 (C.A.)).

[40] The Court of Appeal has stated that “a party to a marriage contract cannot enter into it knowing of shortcomings in disclosure and then rely on those shortcomings as the basis to have the contract set aside.” This statement was made in the context of a marriage contract entered into between two spouses, where the wife was aware of the shortcomings in disclosure as advised by her lawyer and chose not to investigate further. Specifically, the wife had actual knowledge and understood that the marriage contract ended her interest in a particular property, was aware of the uncertainty as to the value of her husband’s interest in that property, and had been given documents disclosing these issues and other valuation uncertainties (see Butty v. Butty, 2009 ONCA 852, 2009, 99 O.R. (3d) 228, at para. 54 (C.A.)).

[41] Even where a party’s non-disclosure was wilful, it may not be sufficient to set aside the agreement if the other party was not completely misled and could have made further inquiries. This is particularly so where the parties chose to ignore the legal advice they received. In other words, the non-disclosure would not have been an important factor in the negotiations of the agreement (see Dochuk v. Dochuk, supra, at para. 25).

C) INDEPENDENT LEGAL ADVICE

[42] On both party’s versions, D.B.S. had ample time to seek ILA and failed to do so. She indicated there was no fraud or coercion and that the agreement reflected their discussions regarding the disposition of the P[...] Crescent home.

[43] The fact that a party did not receive ILA does not necessarily result in an agreement being set aside pursuant to s.56 (4) (b). This is only one factor the court must consider where the challenge to the agreement is based on some other contractual grounds (see Dougherty v. Dougherty, supra, at para. 11, Demaine v. Racine, supra, at para. 30, Bruni v. Bruni, supra, at para. 112). The Court of Appeal has stated that “[l]egal advice is not an automatic antidote for a party’s vulnerability.” Rather, the absence of ILA can support the claim that a party did not understand the nature and consequences of a contract (see Kelly v. Kelly, 2004 CanLII 4328 (ON CA), [2004] O.J. No. 3108, at para. 27 (C.A.), Hicks v. Hicks, supra, at para. 47 (Sup. Ct.)).

[44] The court has refused to set aside a separation agreement where the party requesting to set aside the agreement could have obtained ILA if he or she had wanted to, but chose not to. The court has stated that it is incumbent on the parties to read the agreement carefully before signing it and to obtain ILA if he or she did not understand it. If, on the balance of probabilities, the court finds that the party understood the nature and consequences of the agreement even though he did not have legal advice, and he or she chose not to obtain ILA, then s.56(4)(b) is not satisfied (see Demaine v. Racine, supra, at para 27).

[45] The Court of Appeal has also stated that the fact that a party appreciates that a domestic contract was not good for him or her does not mean that he or she understood the nature or consequences of the domestic contract (Martin v. Sansome, 2014 ONCA 14, [2014] O.J. No. 27, at para. 45.

[46] In Clayton v. Clayton, supra, the question before the court was,

24 … whether a person who chooses not to access financial information available to them, or who later says that they did not understand the information available to them, can then plead that lack in seeking to overturn an agreement which deals with those finances? Secondarily, can a person who, the evidence indicates, chose not to obtain legal advice, then seek to overturn an agreement made without that legal advice?”

The court stated that both parties were intelligent and capable people in positions of responsibility in the work place, the lack of independent advice was mutual, there was a draft that was reviewed and revised together, and the wife was advised by various people to get legal advice but she refused to do so (see Clayton v. Clayton, supra, at paras. 25 and 34). There was also no evidence that the husband withheld financial information, it was available to the wife; if she lacked information it was not because it was withheld (see Clayton v. Clayton, supra, at para. 35).

D) CONCLUSION

[47] I conclude from the evidence that D.B.S. signed the document, without carefully reading it, fully realizing that both parties intended it to be legally binding upon both of them. There is no evidence that J.L.S. took advantage of her at the signing of the agreement. They were not in unequal bargaining positions. At the time of the agreement, they were making equal incomes and she indicated that at the time of the signing of the agreement she thought it was fair.

[48] Regarding the non-disclosure issue, D.B.S. was aware of J.L.S.’s assets. She may or not have known their approximate values. There were no misrepresentations or concealing of assets by J.L.S.. However, it is clear that she failed to make any further enquiries. She thought the agreement was fair at the time and knew it was intended to be legally binding on both of them.

[49] I conclude that she consented to the incomplete disclosure and had the means to ascertain precisely the exact amount of J.L.S.’s assets but chose not to. However, she had a general awareness of J.L.S.’s assets. She was aware of the shortcomings of the disclosure that she had and chose not to investigate further. She took benefits under the contract made in 1997 and did not seek to set it aside until more than 15 years later. There was no duress or unconscionable circumstances. She said the contract was fair and I infer she would have signed the contract even if full disclosure had occurred. In the result, section 56(4) disclosure obligations have not been contravened.

[50] Regarding the ILA issue, the document itself outlined D.B.S.’s right to obtain ILA. The document was signed on October 7, 1997 because she wanted to move into her new home with J.L.S.. However that home purchase closed on November 28, 1997 and I find that she had ample time to obtain ILA if she had wished to. As already indicated, she thought the agreement was fair at the time it was signed and I find, on a balance of probabilities, contrary to her claims otherwise, that she understood the nature and consequences of the contract.

[51] To conclude, she understood the nature and consequences of the contract and was aware of her right to obtain ILA. She simply either chose not or refused to obtain ILA and section 56(4)(b) has not been satisfied – see Martin v. Sansome, supra.

[52] Pursuant to the Miglin analysis, there is no reason to discount the substance of the agreement. The agreement still reflects the original intent of the parties and is in substantial compliance with the Divorce Act, R.S.C. 1985, c. 3. The respondent D.B.S. has failed to satisfy the onus that is on her to establish grounds to set aside the domestic contract.

[53] Accordingly, I find the cohabitation agreement to be valid and legally binding on both parties.

[54] As will be outlined in the subsequent discussion, both parties failed to comply with different provisions of the cohabitation agreement and my analysis will now turn to that discussion.

ISSUE # 2 – IS THE WIFE ENTITLED TO PROCEEDS FROM THE SALE OF THE MATRIMONIAL HOME?

1) FACTS

Husband’s Failure to Comply with Fair Disposition of Matrimonial Home Proceeds

Sections 12 and 3(i)(j) of Cohabitation Agreement

[55] The gist of s. 12 is that the parties shall hold the spousal home in joint tenancy. Upon sale, after payment of proper legal fees, disbursements, real estate commission and mortgages in joint encumbrance, upon the balance remaining being more than $28,000 J.L.S. was to received $18,000, D.B.S. was to receive $10,000 and the rest was to be divided equally. Section 3(i)(j) includes any successor homes purchased with the proceeds of the original P[...] Crescent, Burlington home purchased in 1997.

[56] A fair interpretation of these provisions is that this contract would apply to the P[...] Crescent, Burlington home purchased in 1997 and the “successor spousal home” purchased in 2003 at J[…] Street in Beamsville.

[57] Tab 2 of the respondent’s brief indicates at page 37 that the P[...] Crescent home was purchased for $179,938.75 and the deed was registered on November 28, 1997. The owners are J.L.S. and D.B.S., each having 50 percent as tenants in common. In cross-examination, J.L.S. indicated D.B.S. paid $10,000 as contemplated by the agreement. The first mortgage was payable to Royal Bank for $167,075 (see page 21 of Tab 2 of the respondent’s brief).

[58] The P[...] Crescent residence was sold and closed on July 25, 2003. The sale price was $278,000 (see page 48 of Tab 2 of respondent’s brief). After payment of mortgages and other fees, $90,065.83 was paid to J.L.S. and D.B.S. (see page 47 of said Tab 2).

[59] On August 8, 2003, the couple’s purchase of J[…] Street, Beamsville closed. The deed was registered on August 8, 2003 and the property was registered in the name of J.L.S. and D.B.S. as joint tenants (see Tab 5 of respondent’s brief at page 86).

[60] An amount of $92,721.00 was paid by J.L.S. for the purchase (see Tab 5 of the respondent’s brief, page 85 statement of adjustments) and a mortgage of $218,587.50 was registered on August 8, 2003 to CIBC Mortgages trading as First Line Mortgages, by J.L.S. and D.B.S. as joint tenants (see Tab 5 of the respondent’s brief at page 79).

[61] As indicated in cross-examination, subsequent mortgages to Effort Trust and Home Trust were not paid on time from 2005-2008 and a Power of Sale was initiated and discontinued on April 22, 2008 (see page 288, 289 of Tab 11 of respondent’s materials). J.L.S. says that D.B.S. talked him into the second mortgage. He says D.B.S. was a spendthrift and refused to return to work. He was working 60 to 70 hours per week. D.B.S. says J.L.S. drank too much. Both agree that J.L.S.’s mother bailed them out and loaned/gave them money. It was suggested by D.B.S.’s counsel that D.B.S. paid out thousands of dollars in 2009-2010 for bills and mortgage (see pages 290-304 of Tab 11 of respondent’s materials). D.B.S. testified she made minimal money in those years housecleaning: I find that it is not credible that D.B.S. made the payments for bills and mortgage by herself. What is credible is that L.M.S. (L.M.S.), J.L.S.’s mother, assisted in the paying of these bills. L.M.S.’s evidence that both of them overspent is credible and consistent with the documentary and other evidence.

[62] On April 13, 2007, the Beamsville home was transferred from the couple as joint tenants to J.L.S.. J.L.S. testified this was done for mortgage purposes as D.B.S.’s credit was no good, as she had been writing NSF cheques from 1997 onwards.

[63] The undisputed evidence of L.M.S. is that she assisted the couple financially over the years. At Tab 18 of the applicant’s brief, Volume 1, J.L.S. prepared a promissory note for $20,767.81 dated June 19, 2014 (that is post-separation) that D.B.S. refused to sign. In March of 2014, post-separation, D.B.S. refused to sign an earlier attempt for $18,000.00. Similarly, at Tab 19 of the applicant’s brief, there is a promissory note in the amount of $20,000, payable to J.L.S.’s brother, R.S., dated June 19, 2014 (that is post-separation) which is signed by J.L.S. but is not signed by D.B.S..

[64] There is a schedule outlining the date of payments made by L.M.S. to the couple. The payments prior to the September, 2013 separation are $12,327.81 (see Exhibit 5, which is L.M.S.’s cheque ledger; it shows $5,650.00 in cheques were made pre-separation).

[65] At Tab 16 of the applicant’s brief, there is a Trust Agreement that the J[…] Street, Beamsville residence as of February 21, 2013 was to be held jointly by J.L.S. and L.M.S. but the document clearly states that L.M.S. is on title for mortgage purposes only and has no beneficial ownership. At Tab 17 of the applicant’s brief, there is a Revocation of Trust Agreement, dated April 5, 2013, indicating that in recognition of monies previously loaned by L.M.S. to J.L.S., the previous trust is revoked. There is no evidence that D.B.S. consented to the revocation of the trust transaction. I find that these trust and revocation of trust documents were prepared by J.L.S. just prior to separation in September, 2013. These agreements indicate that the loans were made by L.M.S. to J.L.S.. The cohabitation agreement provides for payment from house proceeds for joint debts and these loans do not qualify. The same comments apply to the alleged $20,000.00 debt to R.S. and these do not qualify as a joint debt. Further, as discussed later, there is a reasonable argument that L.M.S.’s contributions are in fact and law a gift to J.L.S..

[66] I find that these trust and promissory notes, in the circumstances as outlined above (either post separation and/or just before separation), were a sneaky attempt by J.L.S. to deprive his wife of her 50 percent resulting trust in the home. This was not the only sneaky attempt to prejudice D.B.S.’s interests in the spousal home. D.B.S. was served with J.L.S.’s application on November 7, 2013. The document on the first page clearly indicates that Ms. D.B.S. has 30 days to serve and file an Answer. She did not do so.

[67] In cross-examination, she indicated she did not read that part of the application even though it is in bold on the front page. She again indicated she did not read it carefully. She did not file an Answer because J.L.S. continued to sleep with her and have sexual relations and she thought they were carrying on as a family. A motion was brought by J.L.S. before Justice Henderson on April 11, 2014. Justice Henderson ordered that the home be sold and dispensed with the need for the respondent to sign the listing agreement. The April 11, 2014 order indicates that the respondent, though properly served, did not appear. The respondent at the time was living in the same home as the applicant. It was explained that as no Answer had been filed, Mr. Paul Macleod (counsel for the applicant) was allowed to enter the motion on the list without the usual service procedures. Mr. Macleod acted properly but the applicant behaved sneakily and in an underhanded fashion. He could have told her about the motion – they were living in the same house – but said nothing. Shortly after this order, the respondent filed her Answer on May 9, 2014.

2) LAW

[68] Section 14 of FLA retains the presumption of resulting trust when property is transferred by one spouse to another except where: (1) there is a rebuttable presumption in favour of joint tenancy where the spouses formally hold the property as joint tenants and (2) money held in a joint account is deemed to be held as joint tenants.

[69] Paragraph 12 of the cohabitation agreement indicates that the spousal home shall be held in joint tenancy and provides a scheme of distribution of any sale proceeds based on return of contributions to the original home and a 50/50 split for amounts above the total contributions by both parties. Paragraphs 3 (i) and (j) provide for the paragraph 12 scheme to apply to any successor homes.

[70] The Ontario Court of Appeal has confirmed that:

“[s]ection 14 of the [FLA] affirms the presumption of a resulting trust in determining questions of ownership between spouses in the context of gratuitous property transfers. Where the presumption is invoked, the party resisting the imposition of a resulting trust is required to disprove the presumption that his or her spouse is the beneficial owner of an interest in the disputed property” (Korman v. Korman, 2015 ONCA 578, 126 O.R. (3d) 561, at para. 26).

[71] Resulting trusts can arise upon a voluntary transfer from one person to another, or upon a purchase by someone who supplies the purchase money but directs that title be taken in the name of another person. The court may award a non-titled partner an interest in property based on a resulting trust. While it is possible to extend the concept of resulting trust to situations where the non-titled partner indirectly contributed to the acquisition of the property, the unjust enrichment principle and its remedies, including a constructive trust, is able to deal with indirect and non-financial contributions. Hence, the resulting trust analysis is probably best restricted to direct financial contributions and voluntary transfers of property, leaving indirect contributions and non-financial contributions to the constructive trust remedy (see MacLeod & Mamo, Matrimonial Property Law in Canada, Vol. 1 (2009), at I-18).

[emphasis added]

[72] The presumption of resulting trust is the general rule for gratuitous transfers, and hence the onus is on the transferee to demonstrate that a gift was intended (Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para 24). Where there is evidence of intention to make a gift, the presumption of resulting trust does not apply (see MacLeod & Mamo, Matrimonial Property Law in Canada, Vol. 1 (2009), at I-40.9).

[emphasis added]

[73] The Court of Appeal has explained the rebuttable presumption of a resulting trust in Hamilton v. Hamilton, 1996 CanLII 599 (ON CA), [1996] O.J. No. 2634, at para 34 (C.A.), citing Oosterhoff and Gillese, Text, Commentary and Cases on Trusts, 4th ed. (1992) and Hovius, Family Law: Cases Notes and Materials, 3rd ed. (1992),

A presumption of a resulting trust arises in favour of persons who contribute financially to the purchase of property but do not take title in their own name, and do not intend to give a gift of the entire beneficial interest in the property to the registered or recorded title holder. The relevant intention was the intention of the party in the position of donor. Equity presumes that the non-titled party does not intend a gift when he contributes to the purchase price of a property. The non-titled party is treated as the equitable holder of the beneficial interest; the extent of his or her beneficial interest is proportionate to the financial contribution made to acquire the property. The presumption of a resulting trust is rebuttable on a showing by the title-holder that the non-titled party intended the title-holder to have the property for his or her own benefit. The presumption of a resulting trust is also rebuttable on a showing that the transfer to the titled party was not gratuitous.

[emphasis added]

[74] The Supreme Court has stated that the “actual intention of the grantor is the governing consideration.” [emphasis added] Where a gratuitous transfer is being challenged, the trial judge is to start with the applicable presumption and will weigh all of the evidence in order to ascertain the transferor’s actual intention on a balance of probabilities (Kerr v. Baranow, 2011 SCC 10, [2011] S.C.R. No. 10, at paras 17-18). The courts have provided several factors that should be considered in determining the intent:

• Documents
• Quantum of the transfer and its timing
• Statements and conduct of the transferor referable to the transfer
• State of relationship between the transferor and the transferee
• Any pattern of conduct on the part of the transferor relevant to the issue
• The exclusion of any obvious recipient from the transfer
• Whether the transfer was improvident
• Any other circumstances relevant to the transferor’s actual intention

(see Lazier v. Mackey, 2012 ONSC 3812, [2012] O.J. No. 3308, at para. 64)

[75] Regarding evidence subsequent to the transfer, the evidence of intention that arises subsequent to a transfer must be relevant to the intention at the time of the transfer. The trial judge must assess the reliability of this evidence and determine the weight to be given, guarding against evidence that is self-serving or reflects a change in intention (Pecore v. Pecore, supra, at paras. 56-59).

[76] Regarding the L.M.S. “loans,” are they to be considered loans or gifts to either J.L.S. or the couple? After reviewing the case law, Justice Fitzpatrick, in the recent case of Barber v. Magee, 2015 ONSC 8054, [2015] O.J. No. 6818 (Sup. Ct.), held that monies advanced by the husband’s father for the purchase of the home and “loans” during the marriage were in fact and law to be considered as a gift. The factors Justice Fitzpatrick considered in determining the father’s payments were a gift and not a loan are outlined in paragraphs 42 and 68 and include:

1. There were no documents or promissory notes contemporaneous with the payments advanced by the donor.
2. There was no evidence of any manner of repayment.
3. There was no evidence of any security for the loan.
4. There was no demand for repayment before the separation of the parties.
5. There was no litigation to collect the loans.
6. Whether there was an expectation or likelihood of repayment.
7. Whether there was any partial repayment.
8. The donor exerted no control over the matrimonial home.
9. The effect of subsequent conduct by the parties.

3) APPLICATION OF LAW TO FACTS

[77] The first property purchased was P[…] Cresent, Burlington in November 27, 1997, subsequent to the cohabitation agreement. The deed at page 37 of Tab 2 of the respondent’s document brief indicates that J.L.S. and D.B.S. held the property as tenants in common. This is in violation of the cohabitation agreement.

[78] The P[...] Crescent residence was sold in July of 2003 and the proceeds were applied to the purchase of the new residence at J[…] Street, Beamsville. The deed was registered on August 8, 2003 in the name of J.L.S. and D.B.S. as joint tenants. This is in compliance with the cohabitation agreement and the presumption in section 14 of the FLA would now clearly apply.

[79] On April 13, 2007, the home was transferred from the couple to J.L.S.. J.L.S. testified that this was done for mortgage purposes as D.B.S.’s credit was no good. There is absolutely no suggestion that D.B.S. was gifting her share of the home to J.L.S.. Accordingly, the cohabitation agreement and the FLA s. 14 presumption would still apply in favour of D.B.S..

[80] The evidence of L.M.S., J.L.S.’s mother, is that she financially assisted J.L.S. both before and after separation. On February 21, 2013, the Beamsville home was transferred by J.L.S. to J.L.S. and L.M.S. as joint tenants with the consent of the spouse D.B.S. given on February 7, 2013 – see page 228 of Tab 7 of the respondent’s brief. Tab 16 of volume 1 of the applicant’s brief is a trust agreement dated February 7, 2013 indicating that L.M.S. is on title solely as trustee in her son’s interest and has no beneficial ownership in the property. L.M.S. and J.L.S. have signed this document.

[81] It is reasonable to infer that the February 7, 2013 consents and agreements outlined above were done for financing purposes and were not designed to change the beneficial ownership of the Beamsville property. Accordingly, section 14 of the FLA still applied as did the cohabitation agreement in favour of D.B.S.. There is no evidence that any gifts of D.B.S.’s ownership interests were intended by D.B.S. and accordingly she still retained 50% beneficial ownership of the Beamsville property.

[82] The Revocation of Trust agreement dated April 5, 2013 (see Tab 17 of applicant’s volume 1 document brief) was signed by J.L.S. and L.M.S. just months before the September, 2013 separation. The document purports to provide L.M.S. with 50% of house sale proceeds in recognition of loans made by L.M.S. to J.L.S.. The document is signed by J.L.S. and L.M.S. and is not signed by D.B.S.. She is not a party to this document and accordingly, this Revocation of Trust document cannot affect her 50% interest in the Beamsville matrimonial home.

[83] I infer that J.L.S. was concerned about D.B.S.’s beneficial interest situation and therefore attempted to have D.B.S. sign promissory notes (dated post-separation but before the sale of the house), acknowledging that both D.B.S. and J.L.S. owed a significant amount of money to L.M.S. (up to $20,767.81) and R.S. ($20,000). These attempts were made in March, 2014 (see Tabs 21 and 22 of respondent’s document brief) and June, 2014 (see Tabs 18 and 19 of the applicant’s document brief). Note that the June, 2014 Tab 18 promissory note to L.M.S. contains a list of payments made by L.M.S. from 2001 to 2014 but the list is dated June 19, 2014, which appears to have been prepared well after the separation date. All of these attempts were made after the September, 2013 separation date. D.B.S. refused to sign these agreements and she is not bound by them. L.M.S. testified that she expected to get repaid by J.L.S. and D.B.S.. However, there is documentation signed by L.M.S. which refutes that assertion. For example, the Revocation of Trust Agreement, dated April 5, 2013, which both J.L.S. and L.M.S. signed, specifically states that L.M.S.’s loans were made “by L.M.S. to J.L.S..”

[84] As indicated above, the Revocation of Trust agreement clearly refers to loans made by L.M.S. to J.L.S.. The question then arises whether or not payments made by L.M.S. were in fact loans or gifts made by L.M.S. to J.L.S..

[85] Similar to the case of Barber and Magee, supra, there were no promissory notes or notes made at the time of the “loans” made by L.M.S. to her son; there was no evidence of any manner of repayment; there was no security for the loan (in fact the trust agreement executed by L.M.S. at the time of the 2013 house transfer clearly states that L.M.S. has no beneficial ownership in the home); there was no evidence of any demands for payment pre-separation; there was no litigation for repayment pre-separation; given L.M.S.’s knowledge that this couple had no money and were always overspending, there could not be any meaningful expectation by L.M.S. of repayment; and there was no repayment until post-separation when the house was sold. I find on a balance of probabilities that these monies advanced by L.M.S. were intended as gifts when they were advanced with no clear intention or expectation that these funds would be returned.

[86] Considering the evidence in its totality, I find that any presumption of resulting trust on behalf of L.M.S. has been rebutted. I find on a balance of probabilities that L.M.S. gifted the monies she advanced to her son.

[87] If I am mistaken in applying the resulting trust doctrine, the evidence alternatively, at its highest, leads to the conclusion that monies were advanced by L.M.S. solely to J.L.S.. For example, the Revocation of Trust agreement, signed by L.M.S. and J.L.S., dated April 5, 2013 (just before the September, 2013 separation) indicated that L.M.S. is receiving 50% of the house proceeds in recognition of monies previously loaned by L.M.S. to J.L.S.. As D.B.S. was not working and/or making very little money, L.M.S. was either looking to J.L.S. for repayment or gifting the money to J.L.S. (note as indicated before, that the original trust agreement, dated February, 2013, purported to give L.M.S. no beneficial interest in the home even though by that time substantial financial assistance had been provided by L.M.S.).

[88] Paragraph 12 of the cohabitation agreement provides for joint encumbrances to be paid from the proceeds of sale from the matrimonial home. The debts to L.M.S. and R.S. were not joint encumbrances but were either gifts to J.L.S. or debts of J.L.S. only. Paragraph 12 (c) (viii) specifically states that each party should be responsible for any encumbrances incurred by that party.

[89] Accordingly, L.M.S. was not entitled to the 50% share of the net house proceeds and should not have received $25,830.78 from the house proceeds. L.M.S.’s debt should only have been paid from J.L.S.’s share of the house proceeds.

4) CONCLUSION

[90] Pursuant to section 14 of the FLA and the case law summarized above, D.B.S. did not gift away her joint tenancy interest and the proceeds of the sale should have been distributed to the parties in accordance with paragraphs 3 and 12 of the cohabitation agreement. Once that had been done, it was up to J.L.S. to pay his mother L.M.S. for her assistance to him over the years.

[91] The Beamsville property was sold on November 28, 2014, for $436,497.60. It was originally listed at $510,000.00 but reduced over time. The applicant says the house was messy and urine soaked; the respondent says it was clean and tidy. I asked for photos from D.B.S. but none were provided. J.L.S. did not provide any photos either. The net proceeds from the sale after expenses were $51,661.56 (4 x $12,915.39) – per Mr. Macleod’s account which says that $12,915.39 is ¼ of net proceeds which is held in trust – see Tab 15 of the applicant’s brief.

[92] Pursuant to paragraphs 3 and 12 of the cohabitation agreement, the proceeds should have been distributed as follows:

$51,661.56

• $18,000.00 (Husband’s share) $33,661.56
• $10,000.00 (Wife’s share) $23,661.56

[93] The amount of $23,661.56 is to be divided equally. Therefore, each party is entitled to $11,830.78 of the $23,661.56 joint share.

[94] Accordingly, pursuant to the agreement, D.B.S. should have received $11,830.78 plus $10,000.00, totalling $21,830.78, from the house sale.

[95] It is ordered that counsel Mr. McLeod pay $12,915.39 in his trust account to the respondent and J.L.S. shall pay the remaining $8,915.39 ($21,830.78 - $12,915.39) to the respondent. These amounts are subject to any costs set off amounts and are payable within 30 days after a costs order is made.

ISSUE #3 – IS THE WIFE ENTITLED TO SPOUSAL SUPPORT

1) FACTS

Cohabitation Agreement - S. 10 –Responsibilities of the Parties During Cohabitation

Cohabitation Agreement - S. 8 – No Spousal Support

[96] Before doing a Miglin analysis, it may be useful to review the parties’ expectations regarding financial contributions to the household.

[97] Section 10 of the cohabitation agreement indicates that J.L.S. and D.B.S. shall make a reasonable contribution each month to household expenses and the parties shall review this contribution from time to time.

[98] Section 8 stipulates that neither party will claim spousal support from the other.

[99] When the agreement was signed in 1997, both parties were working and each earned approximately $70,000.00 per year. In 1999, the respondent D.B.S. gained employment with Ontario Hydro earning $50,000.00 annually from 1999 to 2002 (see Tab 20 of the respondent’s document brief). In cross-examination, she testified that she gave birth to their first child in 2001 and took maternity leave. She returned in 2002 and the second child E.S. was born in 2003. In 2004, she returned to Hydro for a couple of months and then gave her notice to leave.

[100] D.B.S. attempted to portray her husband J.L.S. as a drunk and abusive. I find that the evidence reveals two aspects to J.L.S.’s character – one bad, the other good. There is no doubt that J.L.S. drinks too much and has a temper which he cannot control while drinking. He was charged and convicted of assaulting D.B.S. in 1998 and 2009. I find, as testified to by D.B.S.’s mother, that he was verbally abusive to D.B.S. as well. It appears that D.B.S. took her physical shots as well. She testified she poked him in the eye and once when he grabbed her breasts doing “tittie twisters,” she retaliated by grabbing his nose and it turned purple.

[101] The good part of J.L.S. is that he is a hard worker, putting in 60 to 70 hours per week at the F[…] plant.

[102] When D.B.S. was pregnant with E.S. in 2003, she wanted to move from the P[...] Crescent address in Burlington as it was a drop-in centre for single guys from F[…] who would drink there and she had to ask them to leave. J.L.S. agreed to sell the house and they moved to Beamsville before E.S.’s birth. This would significantly add to J.L.S.’s commuting time to F[…], requiring him to travel 1.5 to 2 hours each way in addition to his 60 hour work week. Respondent counsel indicated it was only a 45 minute drive but I believe I can take judicial notice that it is a notorious fact that the QEW from F[…] to Stoney Creek, Ontario at rush hour is basically a parking lot and traffic just crawls at a turtle-like pace with rare exception.

[103] I find that J.L.S. moved to Beamsville in order to accommodate his wife’s preferences at some inconvenience and expense to himself.

[104] It is clear from the respondent’s document brief at Tab 11 and from the cross-examination of J.L.S. that the couple experienced significant financial problems from 2004 onwards. For example, page 288-289 at Tab 11 of the respondent’s document brief indicates that legal action (power of sale) on their mortgage was discontinued as of April 22, 2008 due to a payment of $8,303.35 “which brings the mortgage into good standing.” The schedule attached to the promissory note of J.L.S.’s mother, L.M.S. (both parties acknowledge she assisted them financially), at Tab 18 of the applicant’s document brief, Volume 1, shows significant payments made, by L.M.S., towards the mortgages from 2004 to 2011. L.M.S. conceded both parties were overspending and this caused the couple’s financial problems.

[105] A good illustration is the 2007 purchase of a Ford Expedition. D.B.S. testified that she chose it in 2007 with J.L.S. and they brought the car home. She testified she bought it with his consent. The cost was $800.00 per month which I find, given their financial problems, including a pending power of sale, could never be paid unless she returned to work. J.L.S. indicated that he could not afford the payments and the car was repossessed. She denied that J.L.S. helped her buy it because she was supposed to get a job. I do not find her evidence credible on this point. L.M.S., J.L.S.’s mother, provided evidence which was not contradicted in cross-examination. Both the applicant and respondent’s evidence and document briefs support L.M.S.’s testimony that she helped the couple out for years and years. She said she expected to get repaid but it did not happen. Her evidence was that both of them were guilty of overspending beyond their means and they were getting behind on everything. L.M.S. testified that D.B.S. would work once the children went back to school. C.H., a friend of D.B.S., testified that C.H. had two children the same age as D.B.S. and the children in 2007 attended school full time. C.H. returned to work in 2008 and started working full time in 2009. From 2011 to 2012, C.H. worked at Hydro and noticed that D.B.S. and J.L.S. could not pay their hydro bill. C.H. paid their hydro bill for three months in exchange for child care services. 2007 is a significant year as this was the year that J.L.S. obtained a new mortgage. As can be seen from the parcel register at page 3 of 5 of Tab 8 (page 269) of the respondent’s document brief, on April 13, 2007 the Beamsville home was transferred into J.L.S.’s name alone in order for him to qualify for a mortgage from Home Trust Company. J.L.S. testified this was done because D.B.S.’s credit was no good.

[106] Putting it all together, I feel it is reasonable to conclude that D.B.S. had indicated she was returning to work in 2007 as the children were in school full time. It is reasonable to infer that J.L.S. and D.B.S. picked out the Ford Expedition to assist D.B.S. in returning to work. There is no evidence that she made any attempts to return to work and within a year, the Ford Expedition was repossessed and Power of Sale proceedings were initiated against the matrimonial home.

[107] I find that the relationship deteriorated as a result of these financial hardships. J.L.S. was working 60 to 70 hours per week but no financial headway could be made. He resorted to drinking and abusive behaviours to deal with the problem. D.B.S. on the other hand wanted to be a stay-at-home mother and, as Tab 20 of the respondent’s document brief confirms, she never obtained any full time work after 2003 even to the present day despite her and their severe financial difficulties which both were responsible for. Had it not been for family help, this couple would have lost their home long ago.

[108] The evidence indicates that D.B.S. has made no real effort to find full time employment.

[109] Tab 39 of Volume III, of the applicant’s document brief, is a request by J.L.S.’s counsel, dated August, 2014 (one year past the separation date), requesting any and all job applications that D.B.S. has submitted. The letter indicates, “It is my client’s position that your client is deliberately underemployed and there is no excuse for same.”

[110] In cross-examination, D.B.S. agreed she has not provided any job applications to counsel for the applicant. Her position is that she is not seeking full time employment. She admitted that in December of 2014 she was offered a data entry full time job from 7 a.m. to 3 p.m. She told them she was not interested as she was separated and going to court. She testified that she would work full time after court is settled.

[111] As indicated at Yellow Tab 12 of the trial record, her financial statement indicates that she earns $600.00 per month working part time at Wendy’s (this is approximately 6 to 8 days at about $100.00 per day) plus child tax benefits for an annual income of $18,204.00.

[112] In cross-examination, it was brought out that per her Tab 20 (respondent’s document brief) rates of pay, she could earn from $23,400.00 to $29,120.00 per year at a full time job. With child tax benefits that would raise her income to the $30,000.00 to $40,000.00 range.

[113] I conclude that D.B.S. is deliberately underemployed. Not only is she not actively seeking full time employment, she is refusing it when it is offered to her. I find that it is reasonable to conclude that she is trying to maximize her support order and may or may not seek full time employment thereafter. She is doing this at a time that she expects her 55 year old husband with a bad back to work 48 to 60 or 70 hours a week to support the family. This conduct contravenes paragraph 10 of their 1997 agreement.

[114] D.B.S.’s non-attempts to obtain employment and maximize her court-ordered support payments is a common practice in my experience and must be discouraged by the courts. This unscrupulous practice in reality harms the children as the lower income parent deliberately lowers the possible lifestyle of the children. Further, this practice embitters the payor spouse.

[115] I would impute income to D.B.S. at $40,000.00. An evidentiary basis, as outlined above, exists to impute that amount – see McKenna v. McKenna 2015 ONSC 3309, [2015] O.J. No. 2814, at paras. 141-146.

[116] The nurses’ notes in Exhibit 11 indicate that 55 year old J.L.S. has chronic back pain. J.L.S. is now working 40 hours per week due to this situation. This reduces his income on a yearly basis to $73,000.00.

[117] After child support deductions of $1,077.00 for two children, the Divorce Mate spousal mid-range support would be at or about zero with J.L.S.’s income at $73,000 and D.B.S.’s at $40,000 – see Tab 2 of the applicant’s closing submissions. Accordingly, in this context, the paragraph 8 “no claim for spousal support” provision prima facie does not violate the Divorce Act – see Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303.

2) LAW

[118] In McKenna v. McKenna, supra, I outlined the Miglin v. Miglin analysis steps as follows:

In Kelly v. Kelly, 2004 CanLII 4328 (ON CA), [2004] O.J. No. 3108, Justice Laskin at paras 15-21 provided a concise roadmap as to how to conduct an analysis pursuant to the leading case of Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303:

(a) – Support under the Divorce Act

15 Section 15.2 of the DA governs Mrs. Kelly's claim for spousal support. Section 15.2(1) states: A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

16 Section 15.2(4) of the DA spells out the factors a court must consider in ordering support: In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including (a) the length of time the spouses cohabitated;

(b) the functions performed by each spouse during cohabitation; and (c) any order, agreement or arrangement relating to support of either spouse [emphasis added].

(b) – The analysis in Miglin

17 Miglin focusses on the third of the factors in s. 15.2(4): "any order, agreement or arrangement relating to support". The judgment discusses how courts should exercise their discretion under s. 15.2(1) of the DA when a party initially applying for support has already signed an agreement waiving any claim to support. The majority judgment of Bastarache and Arbour JJ. prescribes a two-stage analysis.

1.) – Stage one

18 Stage one has two components: the circumstances of the execution of the agreement and the substance of the agreement.

(i) – Circumstances of execution

19 The court must assess whether there is any reason to discount the agreement because of the circumstances under which it was negotiated and executed. In doing so, the court must consider whether "there were any circumstances of oppression, pressure or other vulnerabilities" that flawed the negotiations (para. 81). Professional assistance - the advice of a lawyer - may compensate for or overcome any vulnerability or power imbalance but will not automatically do so. If the power imbalance vitiates the bargaining process, the court should give the agreement little weight. (ii) – Substance of the agreement

20 If the conditions under which the agreement was negotiated cannot be impeached the court must assess the substance of the agreement. It must decide whether the agreement substantially complies with the objectives of the DA. These objectives include those expressly listed in s. 15.2(6) as well as those of certainty, finality and autonomy.

2.) – Stage two

21 If the agreement satisfies both components of stage one, the court should give it great weight. Still, stage two of the analysis recognizes that because of "the vicissitudes of life" the parties may find themselves in circumstances that they did not contemplate at the time they signed their agreement. Some change is inevitably foreseeable. The court must assess whether the new circumstances of the parties could not reasonably have been anticipated at the time of execution of the agreement; and whether in the light of these new circumstances the agreement no longer reflects the parties' intentions or substantially complies with the DA, thus producing a situation that the court cannot condone.

In Fisher v. Fisher, 2008 ONCA 11, [2008] O.J. No. 38, the Ontario Court of Appeal outlined the factors and objectives of the Divorce Act regarding an order of spousal support at paragraphs 33-34:

Application of the law

Factors and objectives

33 It is helpful to begin by setting out the factors and objectives of ss. 15.2(4) and (6) of the Divorce Act regarding an order of spousal support.

Factors (4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including (a) the length of time the spouses cohabited; (b) the functions performed by each spouse during cohabitation; and (c) any order, agreement or arrangement relating to support of either spouse.

Objectives of spousal support order (6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

34 I will deal with each of the relevant factors and objectives in turn, mindful, as was the trial judge, of the admonition that no one objective predominates; rather, it is important to balance all four objectives in the context of the circumstances of the particular case: See Moge v. Moge at para. 52; Bracklow v. Bracklow at para. 35 and Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303 at para. 39. After this, I will balance the considerations that emerge to determine an appropriate quantum of support.

3) APPLICATION OF LAW TO FACTS

[119] Regarding step 1 of the Miglin analysis, I have already concluded that the conditions under which the cohabitation agreement was negotiated are satisfactory.

[120] Regarding the second component of stage 1 and stage 2, I am to consider the extent to which the agreement takes into account the objectives of the Divorce Act, reflecting an equitable sharing of the economic consequences of the breakdown. The court is to look at the agreement in its totality and not view the spousal support in a vacuum. I am only to intervene where there is not substantial compliance with the objectives of the Divorce Act which includes the factors under s. 15.2, along with finality, certainty and the power of the parties to determine their own affairs. If the agreement is not set aside at the first stage, then the court should give great weight to the agreement see Miglin v. Miglin, supra, at paras. 84-86.

[121] I find that both parties have suffered economic disadvantages from this 16 year cohabitation/marriage. J.L.S. sold the original house in 2003 and incurred a greater commute thereafter to suit D.B.S. ’s wishes. D.B.S. gave up a good paying job to stay at home with the children but refused to obtain any meaningful work once the children were in school full time in or about 2007. This was in violation of the cohabitation agreement and J.L.S.’s wishes. The couple suffered financial problems due to both of them overspending. J.L.S. used to work many overtime hours but is now older and has a bad back. He cannot be expected to work the hours that he has in the past.

[122] D.B.S. has contributed to the deteriorating financial situation of the couple by overspending over the length of the marriage and unreasonably refusing to return to work and turning down good employment until this litigation is over.

[123] Further, given my enforcing the cohabitation agreement and finding that J.L.S.’s debts to his family are his debts and not joint debts, J.L.S. will have to pay these debts on his own in addition to paying D.B.S. her share of the house proceeds. Further, he will have child support payments to pay which can be expected to increase once the children attend university/college.

[124] I am mindful that under the Divorce Mate calculations (see Tab 2 of applicant’s submissions with D.B.S.’s income calculated at $29,120 instead of the imputed $40,000 amount), D.B.S. would receive no or very little spousal support even if there was no cohabitation agreement.

[125] Further, the evidence was clear that D.B.S. has employment available to her and has unreasonably refused to accept employment. This situation is detrimental to her and her children and hopefully she will accept and maintain employment in the future.

4) CONCLUSION

[126] Balancing all the Miglin factors, I have come to the conclusion that the current situation is not a significant departure from the range of reasonable outcomes anticipated by the parties and I find that the agreement substantially complies with the objectives of the Divorce Act and accordingly, in the interest of finality, certainty and the power of the parties to determine their own affairs, I am required to give great weight to the agreement and make the orders below in accordance with the cohabitation agreement – see Miglin and Miglin, supra,at paras. 84-86.

ISSUE #4 – IS THE HUSBAND REQUIRED TO PAY CHILD SUPPORT AND FOR HOW MUCH

[127] D.B.S. has custody of the two children, currently 12 and 14 years old, pursuant to the order of Justice W. MacPherson on September 14, 2015. It is not disputed that J.L.S. must pay child support to D.B.S..

[128] Given J.L.S.’s chronic back problems which, at his age of 55, can at best be expected to be stabilized, it is reasonable for him to work 40 hours per week. This schedule would translate into an income of $73,000.00. Table support at this income level would be $1,077.00. Section 7 expenses shall be paid on a proportionate basis with his income at $73,000.00 and her income at $40,000.00. The applicant shall maintain his children on his extended medical, health and dental benefits. Notice of Assessments will be exchanged by the parties on July 1, 2016 and subsequent years as long as child support is payable.

FINAL ORDER

[129] On consent, the following order is made:

1. J.L.S. and D.B.S. shall contribute to the extraordinary expenses of the two children of the marriage, J.S. DOB […], 2001 and E.S. DOB […], 2003, based on an income of $73,000 for J.L.S. and an income of $40,000 for D.B.S., pursuant to section 7 of the Child Support Guidelines.

2. J.L.S. shall maintain the children of the marriage on his health and dental coverage’s available to him through his place of employment for so long as J.L.S. is obligated to pay child support.

3. J.L.S. shall maintain the children of the marriage on his life insurance policy available to him through his place of employment for so long as he has a child support obligation.

4. J.L.S. shall maintain D.B.S. on his health and dental coverages for so long as she remains eligible for same,

5. The claim for divorce by J.L.S. and D.B.S. shall be severed and shall proceed on an uncontested Affidavit basis and each party shall be at liberty to proceed with same.

[130] As a result of the trial findings, the following additional orders are made:

6. Regarding the proceeds of the sale of the matrimonial home at J[…] Street, Beamsville, J.L.S.’s counsel, Paul McLeod, shall pay $12,915.39 in his trust account to the respondent and J.L.S. shall pay the remaining amount due which is $8,915.39 to the respondent. These amounts are subject to any costs set off amounts and are payable within 30 days after a costs order is made.

7. The cohabitation agreement signed by the parties on October 7, 1997 is valid and neither party is obligated to pay spousal support to the other.

8. Based on an annual income of $73,000, J.L.S. is required to pay guideline child support for the two children of the marriage at the table amount of $1,077. Notice of Assessments will be exchanged by the parties on July 1, 2016 and subsequent years as long as child support is payable.

9. Pursuant to Rule 24 of the Family Law Rules, I find that the applicant J.L.S. has been substantially successful in this litigation and is entitled to an order for costs to be determined at a future court date to be arranged by counsel with the St. Catharines trial co-ordinator.

SKARICA, J.

Released: March 21, 2016

CITATION: J.L.S. v. D.B.S., 2016 ONSC 1704

COURT FILE NO.: 737/13 (St. Catharines)

DATE: 2016-03-21

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

J.L.S.

Applicant

– and –

D.B.S.

Respondent

REASONS FOR JUDGMENT

TS:co

Released: March 21, 2016

[^1]: For example, in Ablaka v. Ablaka, 1991 CanLII 12843 (ON SC), [1991] O.J. No. 758), even though the two parties did not make formal disclosure to each other, the court did not find there to be a lack of disclosure as the parties were aware of each other’s assets. The parties were “living and working together; their business office was in their home and they both had ready access to its contents; they were both intelligent and successful business people.” The court was satisfied that “each of them was fully and intimately aware of their own and the other's assets and liabilities” and there were no “significant assets or liabilities that were unknown to the [other]…”

[^2]: The factors provided in Montreuil v. Montreuil, supra, at para 102 are, Whether the party who did not make full disclosure was asked to do so, Whether that party refused to do so Whether that party misrepresented or concealed financial facts Whether the other party had full financial information in any event Whether the other party would have signed the contract even if the disclosure had occurred